DEPUTY COMMISSIONER OF INCOME TAX(EXEMPTIONS) CIRCLE-2, CHANDIGARH, CHANDIGARH V. SETH JAI PARKASH POLYTECHNIC SOCIETY, YAMUNA NAGAR

ITA 597/CHANDI/2025

AI Insights

The case involves the Revenue appealing against the order of the CIT(A) which allowed the carry forward of excess expenditure over income for future set-off by the Seth Jai Parkash Polytechnic Society, despite the absence of a statutory provision under Section 11 of the Income Tax Act, 1961. The CIT(A) had directed the Assessing Officer to allow the claim after verification, interpreting the excess expenditure as an application of income under Section 11. The Revenue contended that this direction was beyond the jurisdiction of the CIT(A) and contradicted the strict interpretation of exemption provisions as laid down by the Supreme Court. The Tribunal found procedural lapses in the CIT(A)'s order and restored the matter for a fresh decision.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841250 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2026
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 24-04-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MEENAKSHI VOHRA; VIRTUAL
• Assessee Lawyers: TEJMOHAN SINGH
• Keywords: Set aside; Procedural lapse
• Section: 154; 11

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: HYBRID MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमार अŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 597/Chd/2025 िनधाŊरण वषŊ / Assessment Year : 2015-16 The DCIT(Exemptions) Circle-2, Chandigarh बनाम Seth Jai Parkash Polytechnic Society Damla Yamuna Nagar, Haryana-135001 ˕ायी लेखा सं./PAN NO: AADTS1800P अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Tej Mohan Singh, Advocate राजˢ की ओर से/ Revenue by : Smt. Meenakshi Vohra, CIT, DR (Virtual) सुनवाई की तारीख/Date of Hearing : 23/02/2026 उदघोषणा की तारीख/Date of Pronouncement : 23/02/2026 आदेश/Order PER LALIET KUMAR, J.M: This appeal has been preferred by the Revenue against the order dated 28.02.2025 passed by the Ld. CIT(A)/NFAC, Delhi for the Assessment Year 2015-16 arising out of proceedings under section 154 of the Income-tax Act, 1961. 2. In the present appeal Revenue has raised the following grounds: 1. Whether the Ld. CIT(A) erred in allowing the carry forward of excess expenditure over income of the previous year for future set-off, despite the absence of any statutory provision permitting such adjustment under Section 11 of the Income Tax Act, 1961? 2. Whether the Ld. CIT(A) exceeded its jurisdiction under Section 250 by directing the AO to allow a claim that is ultra vires the provisions of Chapter III of the Income Tax Act, 1961? 3. Whether the interpretation of \"application of income\" under Section 11(1)(a) can extend to the adjustment of past excess expenditure against future income, when such a mechanism is not explicitly provided in the statute? 4. Whether the order of the Ld. CIT(A) suffers from legal infirmity by granting a benefit that contravenes the principle of strict interpretation of exemption provisions as laid down by the Hon'ble Supreme Court? Printed from counselvise.com 2 3. The brief facts of the case are that the assessee, a society, filed its return of income declaring nil income. The Assessing Officer rejected the application of the assessee filed under section 154 wherein the assessee had sought carry forward of excess expenditure. 4. Against the order of the AO the assessee carried the matter in appeal before the Ld. CIT(A). The Ld. CIT(A) allowed the appeal of the assessee and directed the Assessing Officer to allow the claim after verification by observing that excess expenditure of earlier year is application of income under section 11 of the Act. 5. Against the order of the Ld. CIT(A) the Revenue preferred in appeal before the Tribunal. 6. During the course of hearing the Ld. DR submitted that the order passed by the Ld. CIT(A) is a non-speaking and cryptic order as no logical reasoning has been provided while granting relief. It was further submitted that the written submissions of the assessee have not been reproduced or discussed in the appellate order. The Ld. DR contended that the Ld. CIT(A) has considered documents allegedly filed during appellate proceedings without proper examination and has allowed the set-off/carry forward of expenditure against future income. It was also argued that no such claim was made in the return of income and therefore the relief granted by the CIT(A) was beyond jurisdiction. Accordingly, the order of the CIT(A) was prayed to be set aside. 7. The Ld. AR relied upon the newly inserted Explanation 4 & 5 to section 11 of the Act and submitted that the assessee has a case on merits in view of the legal position prevailing. However, he fairly conceded that there are conspicuous procedural lapses in the order of the CIT(A) and therefore the matter may be restored to the file of the CIT(A) for passing a fresh order after proper adjudication. 8. We have considered the rival submissions and perused the material available on record. We find that the Ld. CIT(A) has allowed the claim by recording a general observation that excess expenditure constitutes application of income and thereafter directed the Assessing Officer to allow the claim after verification. However, the appellate order does not contain discussion of facts, examination of evidences, reproduction of submissions, or analysis of the legal position applicable to the relevant assessment year. The order does not deal with the issue whether the claim was made in Printed from counselvise.com 3 the return of income nor whether such relief could be granted in rectification proceedings. The order also does not examine the applicability of the law as prevailing during the impugned assessment year. 8.1 In our considered view, the order passed by the Ld. CIT(A) does not satisfy the mandate of section 250(6) of the Act which requires a reasoned and speaking order adjudicating each issue on the basis of facts and law. The absence of reasoning and adjudication renders the order unsustainable. Since both the parties have also agreed that the matter requires fresh examination, we deem it appropriate to set aside the impugned order. 8.2 Accordingly, the order of the Ld. CIT(A) is set aside and the matter is restored to his file with a direction to pass a fresh speaking order after considering submissions of both parties, examining evidences on record, and deciding the issue in accordance with law applicable to the relevant assessment year after providing adequate opportunity of hearing to the assessee. 9. In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open Court on 23/02/2026 Sd/- Sd/- मनोज क ुमार अŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "